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Q n 1 strategic mgt
 

Q n 1 strategic mgt

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    Q n 1 strategic mgt Q n 1 strategic mgt Document Transcript

    • Q.No.1- what are mission statement and vision statement? Make a mission and vision statement for an imaginary group of companies in entertainment sector. Mission statement While the essence of vision is a forward looking view of what an organization wishes to become, mission is what an organization is and why it exists. Several years ago Peter F Drucker raised important philosophical question relates to business. What is our business? And what should it be? These three questions, through simple worded, are in reality the most fundamental questions that any organization can put itself. The answers are based on the analysis of the underlying needs of the society that any organization serves to fulfill. The satisfaction of that need is, then, the business of the organization. Organizations relate their existence to satisfying a particular need of the society. Defining mission A mission was earlier considered as the scope of the business activities a firm pursues. the definition of mission has gradually expanded to represent a concept that embodies the purpose behind the existence of an organization. Thomson defines mission as the “Essential purpose of the organization, concerning particularly why t is in existence, the nature of business it is in, and the customers it seeks to serve and satisfy”. HUNGER and WHEELEN say that mission is the “purpose or reason for the organization’s existence”. There is not much difference of opinion about the definition of mission. Yet, one finds instances of organizations confusing mission with vision or objectives. In strategic mgt literature, mission occupies a definite place as part of strategic intent. Vision statement Aspirations, expressed as strategic intent, should lead to an end; otherwise they would just be castles in the air. That end is vision of organization or an individual. It is what the firm or a person would ultimately like to become. For instance, some of you, say in ten
    • years, or may be even earlier, would like to become general managers managing an SBU in a large, diversified multinational corporation. Or some other among you would like to believe that you will be an entrepreneur in 10-15 years owning your own company dealing with IT services and employing cutting edge technology to serve a global clientele. A firm thinks like that too. Witness what Tata steel says about it vision; “Tata steel enters new millennium with the confidence of a learning, knowledge based and happy organization. We will establish ourselves as a supplier of choice by delighting our customers with our services and our products. in coming decade, we will become the most cost competitive steel plant and so serve the community and the nation.” A vision, therefore, articulates the position that a firm would like to attain in the distant future. Seen from this prospective, the vision encapsulates the basic strategic intent. Defining vision Vision has been defined in several different ways. KOTTER defines it as a “descriptive of an organization, corporate culture, a business, a technology, an activity in future.” EL-NAMAKI considers it as a “mental perception of the kind of environment and individual, or an organization, aspires to create within a broad time horizon and the underlying conditions for the actualization of this perception”. MILLER and DASS view it simply as the “category of intentions that are broad all- inclusive and forward thinking”. The common strand off thought evident in these definitions and several others available in strategic management literature relates to vision being future aspirations that lead to an inspiration to be the best in one’s field of activity. Benefits of vision  Good visions are inspiring and exhilarating  Good visions help in creation of a common identity and a shared sense of purpose  Good visions are competitive, original and unique. They make sense in the marketplace as they are practical
    •  Good visions foster risk-taking and experimentation  Good visions foster long term thinking  Good visions represent integrity; they are truly genuine and can be used for the benefit of people.
    • What are the ways in which businesses analyze the environment before strategizing? The following are the ways in which businesses analyze their environment before strategizing A) Through Environmental scanning B) Through SWOT analysis Environmental scanning environmental scanning can be defined as a process by which organizations monitor their relevant environment to identify opportunities and threats to the process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business for the purpose of taking their strategic decisions Factors to be considered for environmental scanning The external environment in which an organization consists of a bewildering variety of factors. The factors are events, trends, issues, and expectations of different group’s interested groups. The factors are explained below Events; are important and specific occurrences taking place in different environmental sectors Trends: are general tendencies or the course of action along with events take place Issues: are the current concerns that arise in response to events and trends Expectations are the demands made by interested groups in light of their concern issues Approaches to environmental scanning Kuber has suggested that there could be three approaches for sorting out information for environmental scanning. The approaches are as follows : A) Systematic approach under this approach, information for environmental scanning is collected systematically. Information related to markets and customers , changes in legislation and regulations of that have direct impact on the organizations activities , government policy statement s pertaining to the organizations business can be looked into
    • B) Ad hoc approach using this approach an organization may conduct special surveys and studies to deal with specific environmental issues from time to time. Such studies may be conducted, for instance when an organization has to undertake special projects C) Processed form approach for adopting this approach the organization uses information in a processed form, available from different sources both inside and outside the organization uses information supplies by the government agencies or private institutions, it uses secondary sources of data and the information is available in a processed form Methods and techniques used for environmental scanning The range of methods and techniques available for environmental scanning is wide. There are formal and systematic techniques as well as intuitive methods available. Strategists may choose from among these methods and techniques those which suit their needs in terms of quantity and quality, timeliness relevance and cost of environmental information. Various authors have mentioned the methods and techniques used for environmental scanning. Lebell and kranser outline nine groups of technique: single variable extrapolation, theoretical limit envelopes, dynamic models, mapping, multivariate interaction analysis, unstructured expert opinion, structured expert opinion, structured inexpert opinion and unstructured inexpert speculation Owing to increasing complexity of the external environment inevitably there have been attempts to utilize the emerging information technologies in assisting the strategic planners in environmental scanning techniques based on artificial intelligence , neural networks ,data mining and a knowledge based system have been proposed Processed based techniques are used for environmental scanning have been proposed from time to time for example four step based QUEST i.e. quick environmental scanning technique SWOT ANALYSIS SWOT analysis, evolved during the 1960’s at the Stanford research institute ,is a very popular strategic planning technique having applications in many areas including management .Organizations perform a SWOT analysis to understand their and external
    • environments. SWOT, which is acronym for strengths, weakness existing within organizations can be matched with opportunities and threats, is also known as WOTS-UP or TOWS analysis. Through such as analysis, the strengths and weakness of an organization can be matched with threats and opportunities in market or environment so thst an effective strategy could be formulated. An effective organizational strategy is one that capitalizes on the opportunities through the use of strengths and neutralizes threats by minimizing the impact of weakness to achieve predetermined objectives A simple application of SWOT analysis technique involves these steps 1) Setting the objectives of the organization or its unit 2) Identifying its strengths, weakness opportunities and threats 3) Asking four questions a) How do we maximize our strengths? b) How do we minimize our weaknesses? c) How do we capitalize on the opportunities in our external environment? d) How do we protect ourselves from threats in our external environment? 4) Recommending strategies that will optimize the answers from four questions The SWOT analysis is usually done with the help of a template in form of four cell matrix each cell of the matrix representing the strengths, weakness, threats and opportunities. The analysis for preparing the SWOT matrix could be done by a group of managers in a workshop session. The session could use the brainstorming technique for generating ideas about the SWOT factors. SWOT analysis has several benefits among the major being • Simple to use • Low cost • Flexible and can be adapted to varying situations • Leads to clarification of issues • Development of goal oriented issues • Useful as a starting point for strategic analysis The following could be pit falls of using the SWOT analysis indiscriminately
    • • Simplicity of use may turn to be simplistic by trivializing the reality that may be more complex than represented in SWOT analysis • May result in just compiling lists rather than think about what is really important for achieving objectives • Usually reflects an evaluators position and viewpoint that can be misinterpreted to justify a previously decided course of action, rather than be used as means to open new possibilities • Chances exist where strengths may be confused with opportunities or weaknesses with threats What is strategic validation and how is it implemented Strategy Validation is a participative process held as a preparation for implementing strategy and includes testing the business architecture, management model, excellence drivers, business objectives and initiatives. The process helps the client to test the alignment of the strategy with the market under different circumstances and enables to review the assumptions and initiatives more comprehensively. Strategy development sets directions for the company. Implementing strategy requires structuring workable processes for departments and performers. These processes link goals, design and management with the organization, activities and the performers. Based on these processes, measurement and monitoring systems are structured for enabling the performers. Strategy validation is the pre-work for implementing a strategy. Moss and Hue uses two different methods for this purpose, the Learning organization As the name indicate, the process involves participative learning by combining the visions, personal mastery and the mental models of the team members to collectively decide the 'course of action' to implement the strategy under different circumstances.
    • The process entails validating the strategy based on certain emphasis the team has laid on different elements of business, which they believe will produce the expected result. Strategy validation is a part of strategy implementation Strategy validation enables the implementation teams to evaluate the effectiveness before they put forces and initiatives into action. Strategy validation process, using 'Learning Organization' method attempts to check the impact of the strategy in different conditions, just before the implementation stage and tends to do the following: • Review the validity of relationships between the 'SWOT' and the plan with the value chain of the business, infrastructure and the key processes • Review the balance and alignment of the management model with the requirements of the stakeholders. • Review the effectiveness of the initiatives. • Review the contingency plans • Review the plan distribution process Leadership pipeline Leadership pipeline is a method used by Moss and Hue for reviewing the strategy implementation process by testing the alignment of the leadership pipeline with the performance objectives of the company. It is the process of checking the role of the resources of the organization and its various elements in the performance process. Organizations offer a set of abilities in the form of products, services, relationships and image to build an association with the customer who has the need for a job to be done in a given situation and is prepared to make the choice and pay a price.
    • The leadership pipeline provides the following central advantages for implementing strategy: • Integration of functions and roles • Alignment of the resources (through their functionality and performance) with the organization's intent. The process checks the current functionality of the following aspects and enables the implementers to fill the gaps to meet the short and long term objectives of the company: • review the plan distribution communication process The leadership pipeline: validate the relationships of he roles in terms of their differentiation and integration. The process checks the alignment effectiveness when all the roles are integrated together. Competencies: check the competencies linked to each role and help to discover if they adequately support the roles. Check availability of learning opportunities to address the training and development needs for the roles Identification of champions: validate opportunities to identify champions (high potentials and talent) from within to take new responsibilities and positions. Reward and recognition: validate the effectiveness of the reward recognition process and their influence on performance Feedback process: validate the capability of the feedback mechanism to deliver accurate information for realignment. Internal alignments: test the integration between the performance needs and performing levels by checking the current relationships between goals, design and management with the organization, processes and job and performers respectively.
    • After the participants have discovered implementation gaps, they have the opportunity to assemble those using tools of leadership pipeline to address them. Complete Role Value Chain
    • CASE STUDY 1. What are the strategies of Ruia group to expand? Why did it adopt that strategy? If we have al look at whole case study or for that matter of fact for the business of ruia group, the whole business has been based on acquisitions and mergers they have revived the growth of Dunlop again through acquisitions and mergers and also by selling some of its subsidiaries that is through divestment. Thus the strategies which ruia group has adopted to expand is integration strategies there main focus has been on “horizontal integration” that is they have either tried to take over or acquire their rival companies and thus expanded their business. The instances like acquiring the jessop group a PSU company which was running into loss was acquired by ruia group in 2003 and converting it into profitable is quite good example of their success rate through acquisitions and divestments The reason for adopting the strategy of horizontal strategies because of the following reasons o A horizontal integration strategy results in bigger size with concomitant benefits of a stronger competitive position in the industry o Through horizontal integration the RUIA group was able to expand by taking over the competitors business and to increase the market share and benefit from economies of scale o Further the profit margins also go up when an integration takes place horizontally 2. What will be the advantage for Dunlop shareholders if the shares are quoted? The only advantage I see the shareholders of Dunlop will get if there shares are quoted us that they will be getting greater dividends because
    • with RUIA group of companies taking over the Dunlop group the company will be again listed in the stock market and with the profitability and growth of Dunlop being revived the company’s shareholders are in for better prospects and growth if they continue to invest in the same company. Thus if the company continued to grow at the same rate at which it is growing presently it is going to benefit its shareholders to a large extent in the sense that they are going to have greater return or dividends on the investments they have made 3. Have the group and Dunlop in particular right in its strategy of entering the retread market? Well, I guess they have adopted the right strategy to enter the retread market but I reckon they would have done better had they coupled it with vertical integration by taking up activities or by making new products that serve their own needs thus they would have become their suppliers themselves this would have been an added advantage for them. They have the right kind of strategy in place to penetrate the market by combining or merging themselves with other companies and take the competitive advantage in the existing market conditions so I guess if they integrate it with in vertical manner it will be more beneficial for them because they will be able to save costs and thus do business in a more profitable way. If we consider current business environment, the demand of customers, the growing competition make imperative for organizations to have an image make over and go for restructuring either through acquisition or through mergers because the current market conditions are such that organizations can’t survive at their own they to form strategic alliance with some other organization so that they can organize themselves to meet the demands the current market in a better way therefore I feel that the strategy adopted by the Ruia group to penetrate the market was quite right because they gained by forming strategic alliance
    • 4. What are the advantages to Falcon Tyres to be a part of the group? As it has been already discussed in the case study that the ruia group under the dynamic leadership of their chairperson has grown leaps and bounds and certainly when the you are under umbrella of such a big brand an organization is certainly poised to get some advantage because it gives the organization an opportunity to flourish in following ways 1) The falcon got the leadership which would take it to its desired goal 2) Got the competitive advantage because of the brand name they had backing them 3) Good suppliers and distributors 4) Increased customer base 5) Good infrastructure and better manpower to work with 6) Wider market to target 7) And last but not the least increased profit margins Any other suggestion for strategizing to Ruia group? As said in the earlier question that if we consider the current market conditions where it has become impossible for companies to survive at their own the ruia group have done quite well by focusing only on the consolidaton through mergers and acquisitions and in context of current business environment they have done the right thing. But it would have been better had they gone for vertical integration along with horizontal integration it would have been of great benefit to them because they would been able to produce their raw materials themselves thus it would have been an added advantage to them further they can explore better opportunities in both upscale and down scale
    • markets using their research and development team to good effect. They need to continuously innovate make use of new technology and come up products that are best suited for an upscale market and at the same time they need to focus on needs of domestic market and small sector industries also Further they can as said earlier make use of advanced technology and produce some quality products and penetrate in foreign markets also along with domestic markets this would be of great help them thus there aim should be view whole world as a market and develop products which are meant to cater the needs of all people